From the July 2008 issue of Entrepreneur
As pocketbooks tighten in the slow economy, online consumers look to shop smarter, seeking out product recommendations and low prices. Internet startups are taking note, looking beyond the realm of price comparison search engines and offering innovative ways to assist online buyers.

Deal-finding sites and online coupon aggregators have long been popular, but few shopping-related web companies are as ambitious in scope as ThisNext (thisnext.com). Founder Gordon Gould, 38, launched the Santa Monica, California, social shopping service in 2006. "We see [our site] as one large node on a network of product recommendations that exist across the whole social web," says Gould. "We have the opportunity to be the market leader and the de facto standard for how people give and get product recommendations."

A 2007 Pew Internet & American Life Project report found that of 2,400 internet users surveyed, 30 percent have felt overwhelmed by the amount of information they've found while shopping or researching online, while 43 percent have been frustrated by the lack of information. That's a large market that could make use of more advanced shopping assistance sites. ThisNext is based on user-generated product recommendations that tie back into blogs and social networks across the web. Says Gould, "We're recognizing the opportunity and helping to build out the future, but we're building on behavior that has been around for millennia." One challenge for online shopping startups is finding a way to stand out from the crowd. ThisNext's social focus is an example of how companies are setting themselves apart.

Like most startups in the online shopping arena, ThisNext relies on word- of-mouth and search engine advertising to build up its customer base. The company's advertising-based revenue model has been successful: Gould expects 2008 sales to reach several million dollars.

While price comparison sites and product blogs can be started for very little money, Gould used venture capital to jump-start ThisNext. "We probably could have bootstrapped it into existence, but by taking venture money we're able to grow faster to do the land grab. It's a smart strategy when there is a lot of competition in the marketplace," he says.

Price comparison, shopping assistants, bargain finders and product lead generation aren't new to the web, but entrepreneurs can find ways to improve online shopping. Startups that succeed in this space will leverage the growing social nature of the web or focus on underserved niche areas.


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